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A Cohort-Based Analysis of Labor Force Participation for Advanced Economies

Author

Listed:
  • Grigoli, Francesco
  • Koczan, Zsoka
  • Topalova, Petia

Abstract

Advanced economies are in the midst of a major demographic transition, with the number of elderly rising precipitously relative to the working-age population. Yet, despite the acceleration in demographic shifts in the past decade, advanced economies experienced markedly different trajectories in overall labor force participation rates and the workforce attachment of men and women. Using a cohort-based model of labor force participation for 17 advanced economies estimated over the 1985{2016 period, we document a significant role of common patterns of participation over the life cycle and shifts in these patterns across generations for aggregate labor supply, especially in the case of women. The entry of new cohorts of women led to upward shifts in the age participation profile, boosting aggregate participation rates. However, this process plateaued in most advanced economies, with signs of reversal in some. Using the model's results to forecast future participation trends, we project sizable declines in aggregate participation rates over the next three decades due to the aging of the population. Illustrative simulations show that implementing policies encouraging labor supply can help attenuate but may not fully offset demographic pressures.

Suggested Citation

  • Grigoli, Francesco & Koczan, Zsoka & Topalova, Petia, 2018. "A Cohort-Based Analysis of Labor Force Participation for Advanced Economies," GLO Discussion Paper Series 264, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:264
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    References listed on IDEAS

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    1. Grigoli, Francesco & Koczan, Zsoka & Topalova, Petia, 2018. "Drivers of Labor Force Participation in Advanced Economies: Macro and Micro Evidence," GLO Discussion Paper Series 265, Global Labor Organization (GLO).
    2. Patrick Blagrave & Marika Santoro, 2017. "Labor Force Participation in Chile; Recent Trends, Drivers, and Prospects," IMF Working Papers 17/54, International Monetary Fund.
    3. Goldin, Claudia, 2006. "The Quiet Revolution That Transformed Women’s Employment, Education, and Family," Scholarly Articles 2943933, Harvard University Department of Economics.
    4. Balleer, Almut & Gómez-Salvador, Ramón & Turunen, Jarkko, 2009. "Labour force participation in the euro area: a cohort based analysis," Working Paper Series 1049, European Central Bank.
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    Cited by:

    1. Michael Callaghan & Jamie Culling & Finn Robinson, 2018. "Ageing is a drag: Projecting labour force participation in New Zealand," Reserve Bank of New Zealand Analytical Notes series AN2018/10, Reserve Bank of New Zealand.
    2. Francesco Grigoli & Zsoka Koczan & Petia Topalova, 2018. "Drivers of Labor Force Participation in Advanced Economies: Macro and Micro Evidence," IMF Working Papers 18/150, International Monetary Fund.

    More about this item

    Keywords

    Advanced economies; age; cohort; labor force participation; population aging; simulations;

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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